As soybean prices climb higher than they’ve reached in a number of years, Kentucky producers are seeing better yields than their colleagues across the country -- better positioning them to take advantage of these high prices.

“It’s absolutely impossible to predict where they will top out,” said Steve Riggins, a grain marketing specialist at the University of Kentucky College of Agriculture.

Supply and demand is driving the surge in prices.

The U.S. soybean crop now being harvested is small and the soybean supply is not expected to be sufficient in North America for consumption to continue as it has in the past few years, Riggins said.  So use must be cut, and if that does not occur then exports will have to be curtailed by some 20 percent.

However, export figures essentially are on the same track as last year and consumption also is on par with previous years.

“The bottom line is so far there are no domestic or export cuts and we have to cut use,” he said.

October crop estimates by the U.S. Department of Agriculture have the 2003 soybean crop as the third worst in history in terms of deviation below trend, Riggins said. The next crop estimate report will be released Nov. 12.

Yields across the major soybean producing area of the United States are low due to extreme heat and drought. In contrast, Kentucky producers are harvesting a crop that for some may be their highest yields ever.

The October yield estimates show an average of 40 bushels per acre in Kentucky compared to 34 bushels per acre nationally, according to USDA estimates.                                           

At the beginning of November, Kentucky’s soybean harvest was 68 percent complete with farmers continuing to report good to excellent yields, according to the weekly crop report by the Kentucky Agricultural Statistics Service.

Traders bullish on the market say use must go down, while those bearish on the market say we just need to survive until April when soybeans from Brazil come on the market and if necessary import them into the United States, Riggins said. The bulls are looking for beans to possibly climb into the $9 per bushel range while the bears believe the high has been reached. Prices have climbed into the $8 range in recent weeks.

From the farmers’ perspective, Riggins said they should continue to sell smaller quantities on the cash market at larger bumps in price. Producers also should have a reservation price in place. This price marks the point at which they will sell their remaining inventory when the market drops.

Riggins said it also is a perfect opportunity to use put pricing options to secure a pricing floor, while still retaining the right to take advantage of price increases.

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